(NAPS)-Buying a home today involves making choices that can save you time and money-up front and over the long term. These tips can help you avoid delays and hold down costs.
* Shop for the right mortgage. Before determining which mortgage product is right for you, familiarize yourself with all available loan products. For example, if you are looking to purchase a home with a down payment of less than 20 percent, be sure to compare a loan guaranteed by the Federal Housing Administration (FHA) with a conventional low-down-payment mortgage backed by private mortgage insurance (MI). Because of higher premiums for FHA mortgages that took effect this year, many borrowers find that conventional mortgages with MI offer lower monthly payments. Ask your mortgage professional for a price comparison.
* Lower your interest rate. Borrowers can often reduce their mortgage interest rate by paying down "points." Often referred to as a buydown, one point equates to about 1 percent of your loan. If you plan to stay in the home for more than five years, it could be worth the cost.
* Don't delay shopping for homeowner's insurance. Homeowner's insurance is required on a home purchase to protect yourself and your lender in case of vandalism, fire and other unplanned occurrences. Unfortunately, this critical part of the home-buying process is often overlooked by many buyers, leaving them stuck choosing an expensive policy at the last minute. To avoid this situation, shop for homeowner's insurance early to allow yourself ample time to find the best coverage at the most affordable rates.
* Invest in home and pest inspections. A home inspection can determine the quality and condition of the house you are seeking to purchase and can reveal potential problems such as a weakened roof, poor structural integrity or antiquated plumbing. While the typical cost is between $300 and $600, the value or benefit to you is usually far greater. A pest inspection can determine if there are any unwanted guests (e.g., termites, rats, roaches) in the home before you buy. These inspections range from $50 to $150, but the benefits far outweigh what could be a costly proposition to eliminate on your own.
* Know your closing costs. Closing costs include fees for the appraisal, lender, title and recording. These costs can be confusing and can really add up. In order to protect consumers from excessive fees, lenders are required to provide a good-faith estimate and a closing statement that spells out the costs associated with purchasing a home. Request that your lender provide these documents in advance of closing day so you'll know what additional payments may be expected of you.
To learn more about low down-payment mortgages, visit www.SmarterMI.com.